On May 17, the Finance Ministry announced that Malaysia's economic growth for the first quarter of 2024 (Q1 2024) was 4.2 per cent (Q4 2023: 2.9 per cent), surpassing Bloomberg's consensus forecast of 3.9 per cent.
This was driven by a recovery in export performance and robust domestic demand.
As emphasised by Prime Minister Datuk Seri Anwar Ibrahim, the encouraging economic performance in Q1 2024 demonstrates that effective government policies and sound economic management have catalysed this growth.
"Despite global economic uncertainties, Malaysia's economic performance is strengthening. The increased confidence in the domestic capital market is evident from the recent record highs of the FTSE Bursa Malaysia KLCI (FBM KLCI), reflecting renewed interest from global investors in Malaysia's reform narrative," Anwar said.
According to Bank Negara Malaysia, the increase was due to higher household spending, increased employment and wages, and higher capital expenditure. The low unemployment rate of 3.3 per cent and controlled inflation rate of 1.7 per cent also contributed to the nation's economic stability.
Indeed, the economic momentum reflects the country's solid foundations and investor confidence in the domestic economy, further bolstered by the effective policies of the government.
The Madani Economic Framework, which outlines robust strategies for Malaysia's economic growth and identifies new growth industries, has begun to yield positive results for the continuous expansion of the national economy.
Based on this progress, S&P Global Ratings (S&P) maintained a favourable sovereign credit rating for Malaysia.
S&P said Malaysia's economic growth rate is faster than other sovereign nations with similar income levels. Fitch Ratings projects Malaysia's gross domestic product (GDP) to grow by 4.4 per cent in 2024.
Rajiv Batra, chief Asia-Pacific equity strategist at JP Morgan, in an interview with CNBC on July 10, said it had upgraded Malaysia from "underweight" to "neutral" due to the surprising speed of progress. The 4.2 per cent GDP growth in Q1 led JP Morgan to the upgrade.
On July 19, chief statistician Datuk Seri Dr. Mohd Uzir Mahidin announced that Malaysia's economy was projected to grow 5.8 per cent in Q2 2024, marking the highest growth since Q4 2022 at 7.4 per cent.
Mohd Uzir said increased household spending was spurred by festive seasons and school holidays, as well as the second phase of the Sumbangan Tunai Rahmah payments in April 2024.
Additionally, RM6.98 billion had been withdrawn from the Employees Provident Fund's Account 3 as of June to support short-term financial needs.
"For the external sector, the total trade, exports, and imports have increased compared to the same period last year. Other factors include the rise in tourist arrivals, palm oil production, and progress in mega projects," he said.
These achievements not only surpass initial projections but also prove the efficiency of economic management under Anwar's leadership.
Some key initiatives introduced by him include the Madani Economic Framework, which maps out robust strategies for Malaysia's economic growth, identifies new growth industries, and generates positive outcomes for the continuous expansion of the national economy.
The framework also emphasises the importance of inclusive and sustainable economic development, ensuring that all segments of society benefit from economic prosperity.
The Second Madani Budget (2024) focuses on prudent financial management and ensures the welfare of vulnerable groups is safeguarded. The economic measures outlined in the budget have successfully stimulated economic growth and increased investor confidence in the domestic capital market.
The National Energy Transition Roadmap and the New Industrial Master Plan 2030 introduced by the government attract high-value investments in high-value-added industries, thereby creating high-income jobs and improving the quality of life for the people. Investments in the energy and industrial sectors also play a crucial role in strengthening the country's economic foundations.
As Anwar explained, the 5.8 per cent economic growth projection for Q2 indicated that the country has successfully broken through the "wall of worry". This potential growth is indeed an extraordinary figure, beyond the forecasts made by all parties.
It is evidence that, given time, the benefits of the economic reform policies - some of which have caused uproar and concern in the community such as the introduction of new taxes, subsidy rationalisation and the Progressive Wage Policy - will allow Malaysia to rise as a strong nation.
This aligns with Rajiv Batra's remarks that JP Morgan sees the government "Walking the Talk" where despite opposition, it had approved several difficult policies and reforms.
With continuous commitment to economic reform and prudent financial management, Malaysia is on the right track to achieve sustainable and inclusive economic growth, ensuring the prosperity and well-being of the people for the future.
*The writer is the president of UCSI University Accounting and Finance Student Association